If you just sell parts, you won't survive the internet global market. Try selling something you designed yourself. Make a niche product for a niche market. Don't start a business too far from colleges, where there might be interests in arduino and electronics. There are many success stories besides the bigger small businesses. Just don't do what all others are doing.

Hobbytown-Sunnyvale

We just placed a small test order to get our feet wet. We got lots of books, starter kits, Arduino Uno, MotorShield for Arduino, wireless sensor/ receiver shield. And a few other odds and ends (wire, bread boards, components pact, etc...). What do you guys think?

If you are like any other Hobbytown, you sell model cars, trains, and remote controlled vehicles. That being said, LED projects work for all of those categories. You should make an effort to promote use of LEDs and the Arduino to get customers acquainted with Arduino. Perhaps you can have printed examples set-up with required parts and tools, those things will take some of the guessing out of the process.

If you are like any other Hobbytown, you sell model cars, trains, and remote controlled vehicles. That being said, LED projects work for all of those categories. You should make an effort to promote use of LEDs and the Arduino to get customers acquainted with Arduino. Perhaps you can have printed examples set-up with required parts and tools, those things will take some of the guessing out of the process.

Add that with some IR sensors to detect trains inside of a tunnel or even calculate speed. I heard that RadioShack is having posters "Weekend projects" with arduino. Have a look and see what you can do in terms of bringing people into electronics and lowering the initial difficulty.